Biden celebrates semiconductor legislation to boost US competitiveness against China
President Joe Biden virtually joined Michigan Governor Gretchen Whitmer on Tuesday to celebrate the CHIPS and Science Act, which aims to boost US competitiveness against China by allocating billions of dollars to domestic manufacturing of semi -drivers and scientific research.
“This bill makes it clear that the world’s leading innovation will happen in America. We will both invent in America and make it in America,” Biden said. He was scheduled to join the event in person but had to remain isolated after testing positive for COVID-19 again on Saturday in what his doctor described as a “rebound” case.
In the coming days, Biden is expected to sign the legislation, which passed 243 to 187 votes in the House of Representatives and 64 to 33 votes in the Senate last week.
The $280 billion law includes $52 billion in incentives for domestic semiconductor production and research, as well as an investment tax credit for semiconductor manufacturing. Proponents say this will allow the United States to catch up in the global semiconductor manufacturing race currently dominated by China, Taiwan and South Korea.
Last year, a shortage of semiconductors affected the supply of automobiles, electronics and other goods, driving up inflation around the world and undermining Biden’s public approval among voters. American voters.
Michigan, a major hub for the US auto industry, has been one of the states hardest hit by the semiconductor shortage.
“This bill will mean buzzing factories and lower costs for electronics, medical devices, farm equipment and cars for working families,” Whitmer said.
The law includes $4.2 billion to fund defense initiatives and the U.S. mobile broadband market, particularly efforts to promote non-Chinese 5G equipment manufacturing.
Catch up with China
The United States’ share of global semiconductor manufacturing capacity has fallen from 37% in 1990 to 12% today, largely because other governments have offered manufacturing incentives and invested in research to strengthen national chip manufacturing capabilities, according to a report on the state of the industry of the semiconductor industry. Association.
Now, China accounts for 24% of global semiconductor production, followed by Taiwan at 21%, South Korea at 19% and Japan at 13%, according to the report.
With the CHIPS Act, the administration hopes to bring as much semiconductor manufacturing to the United States as possible, said Bonnie Glick, director of the Krach Institute for Tech Diplomacy at Purdue University.
“And what can’t be reasonably onshore, either because the cost is prohibitive or because other allied nations just do it better, we can combine manufacturing and support that,” she told VOA. .
The two allies the administration has used are South Korea and Japan, both of which Biden visited in May. In Seoul, he visited a Samsung computer chip factory that is the model for a $17 billion facility the South Korean tech giant is setting up in the US state of Texas.
Last week, the United States and Japan launched a new joint international semiconductor research center under a “bilateral chip technology partnership” to bolster 2-nanometer chip manufacturing as soon as 2025.
Washington also persuaded Taiwan Semiconductor Manufacturing Ltd. (TSMC) to open an American foundry to produce advanced semiconductors. The $12 billion facility in the state of Arizona was completed last month and is expected to begin production of 5nm chips by 2024. TMSC also has factories in China.
“We’re back in the game,” Biden said Tuesday. “Remember, we invented those chips, we modernized those chips, we made them work, and we can do so much more.”
The CHIPS Act set out a clear strategy for Washington, said Volker Sorger, director of the Intelligent Devices and Systems Laboratory at George Washington University.
“Gain autonomy and eliminate political dependencies on these global supply chain values,” Sorger told VOA.
This strategy puts the United States on a collision course with China, which also aims to be the world leader in semiconductors. In 2015, Beijing launched the Made in China 2025 project, which aimed to boost chip production from less than 10% of global demand at the time to 40% in 2020 and 70% in 2025.
The Made in China 2025 program and the People’s Liberation Army’s military-civilian fusion goal show “openly that Beijing seeks to dominate global technology and supply chains through anti-competitive business practices and the infiltration of research on dual-use technologies,” Glick said.
The US government has pushed for stricter export regulations to China by banning the export of equipment needed to manufacture chips at 14nm and below. “This would mark an escalation from the previous ban covering 10nm and below,” Glick added.
Taiwan’s Strategic Importance
Taiwan – a self-governing island that Beijing claims is its breakaway province – is at the heart of the increasingly tense rivalry between the United States and China.
Taipei has dominated the manufacture of the world’s most high-tech chips, accounting for 92% of the world’s production of semiconductors 10nm or smaller, essentially creating what some observers have called a “silicon shield” that provides support American in the event of a Chinese attack, as well as a deterrent to such a move.
A military dispute over Taiwan could disrupt TMSC’s semiconductor production and have disastrous effects on global manufacturing.
US-China tensions are already scaring tech investors. TSMC shares fell nearly 3% on Tuesday as Speaker of the U.S. House of Representatives Nancy Pelosi landed in Taipei on a visit she said demonstrated American solidarity with the Taiwanese people.
Beijing condemned the visit, the first by a US president in 25 years, as a threat to peace and stability in the Taiwan Strait.
The CHIPS Act does not include provisions aimed at securing supply chains for rare earths – and other critical minerals used in semiconductors and other high-tech elements – in order to reduce the country’s dependence on China, a major producer of these elements.
“I don’t know if we’ve developed a cohesive strategy to access rare and non-rare elements,” Glick said.
Last June, following Biden’s executive order to improve supply chains, the administration released a report concluding that the United States was overly dependent on China for critical minerals. Currently, China controls 87% of the global permanent magnet market, 55% of rare earth mining capacity and 85% of rare earth refining.
Earlier this year, the administration announced actions it said would strengthen the supply chain for these elements, including a contract with US company MP Materials to process heavy rare earth elements at its California production site. – the first processing and separation facility of its kind in the nation.